Answer :
Answer: $41,718.03
Explanation:
Calculation of maturity value at 8% Return:
As per Compound interest Formula
Maturity Value [tex]=P(1+r)^{n}[/tex]
where,
P = Principal Amount = $25,000
r = Rate of Interest = 8% or 0.08
n = No of years = 40 Years
Maturity Value [tex]=25,000(1+0.08)^{40}[/tex]
= $543,113.04
Calculation of maturity value at 8.2% Return:
As per Compound interest Formula
Maturity Value [tex]=P(1+r)^{n}[/tex]
where,
P = Principal Amount = $25,000
r = Rate of Interest = 8.2% or 0.082
n = No of years = 40 Years
Maturity Value [tex]=25,000(1+0.082)^{40}[/tex]
= $584,831.07
The extra amount can be earned at 8.2 percent rather than just 8 percent:
= $584,831.07 - $543,113.04
= $41,718.03
Therefore, $41,718.03 can be earned extra at 8.2 percent rather than just 8 percent